Members demand fast, easy and convenient experiences, but what happens when transactions go wrong? When a member is a victim of fraud, what starts as a convenient experience can quickly turn difficult, exposing credit unions to a financial hit.

Regulations are shifting fraud liability from consumers to financial institutions. At the same time, innovation is taking significant steps forward, including the recent launch of FedNow, which supports nearly real-time transactions.

“Members want to feel like their money and personal information are safe,” says Brian Keefe, senior presales consultant at NICE Actimize. “And fraud can erode the member experience, even when a person gets their money back.”

Striking a balance between managing increased liability and providing the experiences that members expect can help credit unions capture a competitive edge and improve the member experience.

Pushing beyond pattern recognition in real time

Every member has patterns. They bank at certain times of the day, use specific types of devices, and log in from certain internet provider addresses. To catch fraud, many credit unions are already leveraging technology to spot abnormalities by examining patterns related to user-specific habits.

However, the challenge is that much of this technology still requires some manual effort and doesn’t operate around the clock. And with liability shifting from financial institutions, fast, real-time responses are essential to mitigate the fraud risk.

“You need the ability to look at a transaction from end to end, at the moment it’s happening,” says Keefe. “With legacy systems, the processes often can’t keep up with the instant nature of evolving payment capabilities, such as FedNow.”

In contrast, newer technologies can detect unusual behavior 24/7, but they also, without human interaction, continue learning that’s based on a member’s specific behaviors. And according to Keefe, it’s this capability that makes a member profile more robust, which is critical when preventing fraud.

Exploring new paths to reduce risk

Regulators’ desire to shift more liability away from consumers to financial institutions isn’t likely to change course, according to Keefe. As members demand faster and more instant transactions, fraudsters will continue to look for opportunities to exploit new capabilities.

Scaling back product offerings to reduce risk is one path, but another is leveraging technology to keep up with real-time risk.

“There are many different types of fraud events that could cripple a financial institution, and not just financial but in the important area of trust,” says Keefe. “So, I would focus on making your fraud safeguards robust end to end and adopting safeguards that keep pace with the instant experiences that members demand.”